Whetting the dragon’s energy appetite

India and China aside, both regions are net energy consumers, both consume similar shares of the world’s energy reserves and both are struggling to diversify energy sources in difficult international conditions.

The temptation to see each other as competitors, scrambling for precious resources, is immense, but diplomats say that does not necessarily have to be the case.

Earlier this year the European Commission, in its strategy for energy security, attempted to take a more pragmatic approach.

It noted specifically the need for the EU to talk to other consumers in order to address global warming and to manage the security of supply for all. Although much of the focus may have been on engaging the US, the growing need for energy in Asia, and the consequent impact on the environment, is putting pressure on the EU to talk more to Asian consumers. And the dialogue must be with more than just China and India. Smaller Asian countries are making their impact on world energy markets felt.

According to statistics from energy company BP, Singapore and Thailand together import around the same amount of oil each day as France. Japan meanwhile accounts for around 3% of the world’s total gas consumption.

According to some observers, developing energy efficient technology and sharing this technology between the EU and the countries of South East Asia, as well as Japan and South Korea could result in significant reductions in consumption.

The ITER programme is an often quoted example of EU-Asian co-operation. Although Japan and France competed to become the site of world’s first experimental nuclear fusion reactor, the project has successfully included Japan, Korea, China and India, alongside the EU in an attempt to produce clean energy supplies.

Nevertheless, all agree, China and its use of fossil fuels cannot be ignored if energy security and global warming are to be tackled effectively.

According to the International Energy Agency every two years China increases its power generation capacity by as much as the total production in France.

But crucially, 75% of China’s energy needs are met by burning coal – a relatively inefficient and dirty source of energy. Consequently China alone accounts for half of all emissions from developing countries.

Optimistic observers argue that the Chinese government’s drive to clean up its environment and move away from coal offers an opportunity for the EU to introduce cleaner and more hi-tech sources of energy.

The most optimistic officials say that deeper energy ties with China could help pave the way for a post-Kyoto emission regime which includes China and the US.

But despite the EU’s apparent pragmatism, China’s thirst for oil undeniably poses problems for the EU. Expectations that China’s growing economic importance would eventual translate into greater leverage in developing energy markets have now been realised, most acutely in Latin America, sub-Saharan Africa and central Asia.

According to the Asia Pacific Energy Research Centre, China’s dependency on oil imports is likely to reach 70% by 2030, up from 22% in 2002.

The question policymakers are now struggling with is whether China will clean up its act before its import dependence starts to affect existing EU supplies from Russia and the Middle East.